The Bear Continues
The IMC blog has been on a short sale campaign in the cocoa/sugar spread for nearly seventeen months. Thanks to the initial position and some ‘add-ons’ we picked up, the blog is short a March cocoa/sugar spread from the equivalent of +$21,866 (premium cocoa), short a second March cocoa/sugar spread from the equivalent of +$18,509.80 (premium cocoa), short a third March cocoa/sugar spread from the equivalent of +$15,300.40 (premium cocoa), and short a fourth March cocoa/sugar spread from the equivalent of +$1,550.40 (premium cocoa).
The bear market remains in full force, so we will remain short. Currently, it will take a two-consecutive day close above the declining 100-day Moving Average to tell us that the trend has changed and prompt us to take the money and run. That hasn’t happened since last April.

Cocoa Sugar spread (nearest-futures) daily
Furthermore, we are waiting to see what happens if/when the spread drops to -$4,000 (premium sugar). Prior bear markets in the cocoa/sugar spread ended after this level was reached and set the stage for bull markets. That means we will start thinking about trading the long side of the cocoa/sugar spread if it makes down to this area.
Trade Strategy:
On the four March cocoa/sugar spreads entered at the equivalents of +$21,866, +$18,509.80, +$15,300.40, and +$1,550.40 (premium cocoa), roll to the May spreads at the market-on-close on Friday, February 24th. Risk all four spreads to a two-consecutive day close above the declining 100-day Moving Average, basis the nearest-futures.